Phazon Navigates Long Delays, Angry Consumers in Quest to Get to Market
A little over two years ago, Phazon was a little-known company that decided to launch an Indiegogo campaign for their in-development truly wireless earbuds. Founder Chris Houle’s product promised to be the only truly wireless product that didn’t require ear tips and was guaranteed to never fall out. Phazon touted its strength as a waterproof, shockproof, and sweatproof product that provided HD sound quality.
The campaign was a massive success, topping $2.1 million raised before it closed, and Houle even brought the product to our CE Week event in New York City later that summer to show it off to the CE retail crowd. There, it was a recipient of one of our Best in Show awards.
But, in the year and a half since CE Week 2016, Houle and Phazon have been on a tumultuous roller coaster ride as the product has struggled to get to market. As their company blog details, Phazon has had an incredibly rough go trying to find the right manufacturing partner for their technology.
In an interview with Dealerscope, Houle explained that the PCB—printed circuit board—the company developed for its earbuds was a lot more “technologically advanced” than what most manufacturers of truly wireless earbuds were used to seeing. It’s that part of the earbud that contains all of the circuitry and antennas that allow the earbuds to connect to each other and produce a Bluetooth signal, among many other functions.
“We tried out local and Chinese manufacturers, and it didn't go well because those guys didn't really understand the technology and why we were doing the PCB the way that we were,” Houle said. “So, we learned throughout the journey that manufacturers, because they want to have the lowest reject rate per batch, they tend to organize and edit the PCB source file in their own way. But the problem with that is, it's so dense—our PCB—that if you make just a slight modification on it, it's going to mix up the whole experience.”
Those edits to the source file essentially caused the product to stop working. But the real issues arose, according to Houle, from a lack of openness and disclosure by the manufacturers that the company was initially working with. Phazon, according to Houle, had no knowledge of the so-called edits to their PCB source file until they dug deeper into the issues dogging their design. And only when they went back to the manufacturer to ask about any changes made were they told that, indeed, the manufacturer had tinkered with the PCB source file.
“That was a big struggle, and the most important part of that is that when they do some editing on the source file, they just don't tell us. And that's the big thing because we think they made the product as we requested it, but in the end it's not and we're left trying to figure out why it's not working,” said Houle. “I come from an accounting background. When we do a modification on, like, the financial statements for a client, we would present them to the client so they know what's going on. But they don't really do that in the PCB manufacturing business.”
So with each faulty batch, according to Houle, Phazon was left scrambling to find the edits that were made, correct them, and move on to the next potential manufacturing partner with the hope that they’d be able to complete the job correctly. And to that point, Houle told Dealerscope, Phazon believes they’ve finally found the right partner to build its product. Houle, though, was still unwilling to commit to a firm ship date because of how “highly technical” the process can be. His hope, though, is that product will be available and shipping in “the next few months.”
While nailing down their PCB manufacturer helps Phazon clear a major hurdle, it doesn’t do much in terms of solving their major problem with regard to a long line of ticked off early backers. Admittedly, consumers who spend time in the crowdfunding space probably have at least one—but probably a few—stories that they could share with you of projects they’ve backed that failed to ever come to fruition. Unfortunately, that’s the risk consumers, and VC’s in all reality, take when they decide to back a product or company that is, for all intents and purposes, a startup.
Phazon feels different, though, because the company got out way ahead of itself, experienced overnight success on Indiegogo, and has since been dragging backers along for two-plus years as they wait for their promised product to land in their mailboxes.
A quick glance at the still-active campaign page and the comments within gives you a pretty decent sense of how not-so-kindly Phazon backers have taken each update from the company. Every day there are at least a few profanity-laden posts added to the string of comments, which show the growing frustration of a community of enthusiasts that feel scorned by the company—and even some who feel they’ve been scammed into throwing their money at a product that’ll “never come to market.”
When asked about the blowback, Houle said Phazon is very aware of the backers who’ve become angry but tried to assure us that those backers were few and far between.
“The vast, vast majority of our backers, I think they understand what we're facing. I mean, of course they're not super happy about the delays and they get impatient with that. But there are some backers who are extremely angry, and that's just part of the game,” he said. “They're definitely a minority, but you still have to face them, and sometimes it's just not possible to reason with them. That's unfortunate, but other than that I think we're really doing fine with the backers.”
Houle said Phazon has tried to communicate updates with backers as often as possible, at one point delivering biweekly updates. Those updates have since been fewer and farther between, but, for what it’s worth, they have been detailed updates that try to explain the technical difficulties that Phazon has been working through. And, to address the financial concerns of some backers, Houle said Phazon has plenty of funding to get through final production of the product. Once they have the final working prototype in hand, he expects he will hit the road to start looking for additional backers as the company looks to scale its production efforts.
Jumping the Gun
Part of what makes the Phazon story a cringeworthy one is that the company appeared to be way out in front of the truly wireless earbud market. At CE Week 2016 they showed off a product that was primed to succeed. It was out in front of the AirPods from Apple. And other major manufacturers were still months, even closer to a year away at that point from getting into the truly wireless space. But since the first half of 2016, the company has seemingly lost all momentum, and none of the talk about them right now is positive.
Houle, though, said he has no real regrets about getting his product out there as early as he did. Getting the name out there, he said, helped the company build up its “brand equity” and helped people recognize the name.
The only thing Houle said he would change is the readiness of the supply chain around Phazon.
“Having a supply chain already established definitely would have been a lot better, but those are the things you learn as you go through this game,” he said. “But again, I think it was a really good idea to launch early. I mean, of course when we look at ourselves, sometimes it's not too cool when we're having those delays, but when you compare us to other crowdfunding campaigns, it's kind of the average, and usually they're not doing that much of a high-tech product, and they're still having to play catch-up with those kinds of delays.”